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Audited Condensed Consolidated Financial Statements For The Years 29 February 2016 And 28 February 2015
Rockwell Diamonds Inc.
(A company incorporated in accordance with the laws of British
Columbia, Canada)
(Incorporation number BC0354545)
(South African registration number: 2007/031582/10)
Primary listing: TSX
Secondary listing: JSE
Share code on the JSE Limited: RDI ISIN: CA77434W2022
Share code on the TSX: RDI CUSIP Number: 77434W103 (“Rockwell” or
“the Group”)
30 May 2016
Audited condensed consolidated financial statements
for the years 29 February 2016 and 28 February 2015
As at As at
29 February 28 February
Amounts in Canadian Dollars (‘000) 2016 2015
Assets
Non-current assets
Mineral property interests 23 871 16 518
Investment in associates 452 396
Property, plant and equipment 25 506 27 001
Investments and deposits 1 344 1 502
Rehabilitation deposits 1 103 3 376
Total non-current assets 52 276 48 793
Current assets
Inventories 2 100 2 177
Loans to related parties - 8
Current tax receivable - 37
Trade and other receivables 4 083 4 889
Cash and cash equivalents 58 576
Assets held for sale - 13 525
Total current assets 6 241 21 212
Total assets 58 517 70 005
Equity and liabilities
Equity
Share capital 147 472 147 435
Reserves (13 607) (8 575)
Retained loss (130 358) (102 076)
Total equity attributable to the equity
holders of the Group 3 507 36 784
Non-controlling interest - (2 369)
Total equity 3 507 34 415
Liabilities
Non-current liabilities
Loans from related parties 2 148 -
Loans and borrowings 24 425 3 844
Finance lease obligation 430 1 276
Deferred tax 4 867 2 995
Rehabilitation obligation 7 753 5 987
Total non-current liabilities 39 623 14 102
Current liabilities
Loans from related parties 1 218 162
Loans and borrowings - 2 296
Finance lease obligation 594 708
Trade and other payables 12 185 10 902
Bank overdraft 1 390 –
Liabilities held for sale - 7 420
Total current liabilities 15 387 21 488
Total liabilities 55 010 35 590
Total equity and liabilities 58 517 70 005
Consolidated statements of financial performance
For the For the
year ended year ended
29 February 28 February
Amounts in Canadian Dollars (‘000) 2016 2015
Sale of diamonds 37 710 56 948
Beneficiation income 9 629 11 050
Cost of sales before amortisation
and depreciation (46 598) (68 827)
Gross profit (loss) before amortization
and depreciation 741 (829)
Amortization of mineral property interests (1 795) (793)
Depreciation of property, plant and
equipment (10 169) (6 273)
Rehabilitation obligation recognized (1 555) (993)
Gross loss (12 778) (8 888)
Other income 240 1 619
General, administration and business
development expenses (5 252) (5 895)
Loss on sale of subsidiary (1 774) –
Realized foreign exchange with sale of
subsidiary 1 276 –
Impairments (669) (3 643)
Loss before net finance costs (18 957) (16 807)
Finance income 88 449
Foreign exchange loss on US$ loans (5 482) -
Finance costs (4 111) (1 308)
Loss after net finance costs (28 462) (17 666)
Share of profit from equity accounted
investments 152 149
Loss before income tax recovery (28 310) (17 517)
Income tax recovery 629 2 991
Loss for the year (27 681) (14 526)
(Loss) income attributable to:
Owners of the parent (28 282) (13 980)
Non-controlling interest 601 (546)
(27 681) (14 526)
Loss per share
Basic and diluted loss per share (cents) (51.79) (25.89)
Consolidated statements of comprehensive income
For the For the
year ended year ended
29 February 28 February
Amounts in Canadian Dollars (‘000) 2016 2015
Loss for the year (27 681) (14 526)
Other comprehensive income net
of taxation
Items that are or may be reclassified
to profit or loss
Exchange differences on translating
foreign operations (3 735) 1 108
Realized foreign exchange with sale of
subsidiary (1 276) -
Other comprehensive income for the year
net of taxation (5 011) 1 108
Total comprehensive loss (32 692) (13 418)
Total comprehensive income
attributable to:
Owners of the Group (33 383) (12 786)
Non-controlling interest 691 (632)
Total comprehensive income for the year (32 692) (13 418)
Consolidated statements of changes in equity
Foreign Share-
currency based
Amounts in Canadia Share translation payment Total
Dollars (‘000) capital reserve* reserve** reserves
Balance at
1 March 2014 147 073 (18 799) 8 790 (10 009)
Total comprehensive
income for the year
Loss for the year - - - -
Other comprehensive
income - 1 194 - 1 194
Total comprehensive
income for the year - 1 194 - 1 194
Share-based payment
expense - - 240 240
Share options
exercised 16 - - -
Shares issued to
employees 347 - - -
Share issue costs (1) - - -
Total changes 362 1 194 240 1 434
Balance at
28 February 2015 147 435 (17 605) 9 030 (8 575)
Total comprehensive
income for the year
(Loss) income for
the year - - - -
Other comprehensive
income - (5 101) - (5 101)
Total comprehensive
income for the year - (5 101) - (5 101)
Share-based payment
expense - – 69 69
Shares issued to
employees 43 - - -
Share issue costs (6) - - -
Disposal of
subsidiary – – – –
Total changes 37 (5 101) 69 (5 032)
Balance at
29 February 2016 147 472 (22 076) 9 099 (13 607)
Total
attribu-
table to Non-
equity control-
Amounts in Canadia Retained holders of ling Total
Dollars (‘000) loss the Group interest equity
Retained loss
Balance at
1 March 2014 (88 096) 48 968 (1 737) 47 231
Total comprehensive
income for the year
Loss for the year (13 980) (13 980) (546) (14 526)
Other comprehensive
income - 1 194 (86) 1 108
Total comprehensive
income for the year (13 980) (12 786) (632) (13 418)
Share-based payment
expense - 240 - 240
Share options
excercised - 16 - 16
Shares issued to
employees - 347 - 347
Share issue costs - (1) - (1)
Total changes (13 980) (12 184) (632) (12 816)
Balance at
28 February 2015 (102 076) 36 784 (2 369) 34 415
Total comprehensive
income for the year
(Loss) income for
the year (28 282) (28 282) 601 (27 681)
Other comprehensive
income – (5 101) 90 (5 101)
Total comprehensive
income for the year (28 282) (33 383) 69 (32 692)
Share-based payment
expense – 69 – 69
Shares issued to
employees - 43 - 43
Share issue costs - (6) – (6)
Disposal of
subsidiary – - 1 678 1 678
Total changes (28 282) (33 277) 2 369 (30 908)
Balance at
29 February 2016 (130 358) 3 507 - 3 507
* Currency translation differences arising on the conversion of the
results and financial position of foreign operations from their
functional currency to the Group’s presentation currency are
accumulated in the foreign currency translation reserve.
** Equity settled share-based payment transactions are accumulated in
the share-based payment reserve.
Consolidated statements of cash flows
For the For the
year ended year ended
29 February 28 February
Amounts in Canadian Dollars (‘000) 2016 2015
Cash receipts from customers 43 607 68 301
Cash paid to suppliers and employees (47 555) (67 644)
Cash (used in) generated from operations (3 948) 657
Finance income 88 263
Finance costs (374) (469)
Tax paid 37 -
Net cash (outflow) inflow from
operating activities (4 197) 451
Cash flows from investing activities
Purchase of property, plant and
equipment (2 057) (4 070)
Proceeds from sale of property, plant
and equipment 131 367
Purchase of mineral property interests (9) (663)
Acquisition of subsidiary (1 708) -
Proceeds from sale of subsidiary 2 098 -
Advances on deferred consideration from
sale of subsidiary 1 312 -
Advances from related party loans
(investing) 1 511 328
(Increase) decrease in investments and
deposits (198) 2 575
Decrease (increase) in rehabilitation
deposits 1 810 (1 623)
Net cash inflow (outflow) from investing
activities 2 890 (3 086)
Cash flows from financing activities
Proceeds on share issue – 16
Share issue costs (6) (1)
Advances from loans and borrowings - 4 126
(Repayment of) proceeds from finance
lease obligations (783) 1 606
Advances from related party loan
(financing) 188 -
Net cash inflow from financing
activities (601) 5 747
Net movement in cash and cash
equivalents for the year (1 908) 3 112
Cash and cash equivalents at the
beginning of the year 576 (1 760)
Cash and cash equivalents included in
assets held for sale - (776)
Total cash and cash equivalents at end
of the year (1 332) 576
Sale and acquisition of subsidiaries
Sale of subsidiary
The acquisition consortium assumed control of Tirisano on March 28,
2015, and therefore the Group accounted for the sale as of that date.
The cash consideration was to be settled by way of two initial
payments totaling ZAR20 million ($1.8 million), followed by 20
equal monthly instalments of ZAR2 million ($0.17 million), of which
9 have been received to date. Therefore as at 29 February 2016,
ZAR22 million ($1.9 million) was outstanding on the sale price.
This was received after year-end. Agreement has been concluded
after 29 February 2016 for early settlement of the remaining
balance in the amount of ZAR20 million after a ZAR2 million
settlement discount.
Carrying value of assets sold
Property, plant and equipment 1 417
Mineral property interests 8 000
Rehabilitation obligation (2 072)
Rehabilitation deposits 1 739
Trade and other receivables 1 142
Trade and other payables (238)
Loans and borrowings (3 720)
Loan to related party 8
Outside shareholders 1 678
Total net assets sold 7 954
Net assets sold 7 954
Loss on sale of subsidiary (1 774)
6 180
Consideraton
Cash received 2 098
Deferred consideration – outstanding at year end 2 770
Deferred consideration – received since acquisition 1 312
6 180
Business combination
On May 25, 2015, Rockwell announced the closing of the
Bondeo 140 cc acquisition (“Steyn Transaction”), and assumed
control on May 28, 2015. All required approvals and long term
acquisition credit facilities were secured.
The acquisition was accounted for as an acquired business in terms
of IFRS 3: Business Combinations. It included the purchase of 100%
of the issued share capital in Pioneer Minerals Proprietary Limited
which owns the Remhoogte property, from Bondeo 140 cc, the Holsloot
and Bo-Karoo properties and certain earthmoving equipment and plant.
The movable assets acquired have been included in a first security
charge securing the two long term acquisition credit facilities
from Diacore and Emerald.
The following summarises the fair value of assets and liabilities
acquired
Mineral property interest 13 130
Property, plant and equipment 13 385
Deferred tax (3 368)
Rehabilitation obligation (994)
Other liabilities (99)
Total identifiable net assets 22 054
The deferred tax arises under IFRS as the difference between the
fair value and the tax base of the asset acquired, times the tax
rate. In future years, depreciation and amortization will be greater
than the tax cover on the asset, at which time the deferred tax
balance will be drawn down. It does not represent a tax liability
owing at present.
The Group financed the purchase consideration through
Cash (513)
Bridging loan - Diacore (paid directly by
vendor to seller) (20 346)
Bridging loan - Emerald (1 195)
(22 054)
Net cash outflow from Company, on acquisition
Cash consideration paid (1 708)
Loss per share
For the For the
year ended year ended
29 February 28 February
Amounts in Canadian Dollars (‘000) 2016 2015
Loss per share
Basic and diluted loss per share
Cents per share (51.79) (25.89)
Basic loss per share was calculated based
on a weighted average number of common
shares of 54 610 498 (2015: 54 001 354).
Reconciliation of loss for the year to
basic loss
Loss for the year (27 681) (14 526)
Adjusted for:
Loss attributable to non-controlling
interest (601) 546
Basic loss attributable to owners of
the Group (28 282) (13 980)
At 29 February 2016 and 28 February 2015
the impact of share-based payment
options and warrants were excluded
from the weighted average number of
shares, for the purpose of the diluted
loss per share calculation, as the
effect would have been anti-dilutive.
Basic and diluted headline loss per share
Cents per share (49.03) (19.81)
Reconciliation between basic loss and
headline loss
Basic loss attributable to owners of the
Group (28 282) (13 980)
Adjusted for:
Loss on disposal of property, plant
and equipment and mineral properties 340 266
Impairment of mineral property interests - 2 576
Impairment of property, plant and equipment 669 438
Loss on sale of subsidiary 1 774 -
Realized foreign exchange with
sale of subsidiary (1 276) -
Non-controlling interest portion of
above adjustments - -
Headline loss attributable to owners
of the Group (26 775) (10 700)
The basic and diluted headline loss per share disclosure is provided
based on the listing requirements of the Johannesburg Stock Exchange
(Group’s secondary listing). The disclosure of basic and diluted
headline loss per share is provided in accordance with Circular
2/2013 as issued by the South African Institute of Chartered
Accountants. Headline loss represents the basic loss attributable to
the owners of the Group excluding certain re-measurements.
At 29 February 2016 and 28 February 2015 the impact of share-based
payment options and warrants were excluded from the weighted average
number of shares, for the purpose of the diluted headline loss per
share calculation, as the effect would have been anti-dilutive.
Segmental information
The Group has three reportable operating segments, as described
below, which are the Group’s operating divisions. These divisions
offer different diamond product characteristics, qualities,
geological characteristics, processes and services, and are managed
separately because they require different technology and profit or
cost strategies. For each of the divisions the Group executive
committee (chief operating decision making body) reviews internally
managed reports on at least a monthly basis. The following describes
the operations in each of the Group’s reportable segments:
- Northern Cape operation is associated with the mining of palaeo
channels and rooikoppie gravels and the recovery of high value and
larger carat size diamonds;
- North West operation is associated with the mining of potholes and
the recovery of lower value and smaller carat size diamonds; and
- Corporate represents the corporate management and administrative
function of the Group.
The reconciliation column represents the inter group transactions
eliminated on consolidation. All reportable segments are located in
the same geographical jurisdiction. Information regarding the results
of each of the reportable segments is included below.
For the year ended 29 February 2016
Amounts in
Canadian Northern North Corpo- Recon-
Dollars (‘000) Cape West rate ciling Total
Property, plant
and equipment 25 164 - 342 - 25 506
Mineral property
interests 23 871 - - - 23 871
Total assets 56 394 - 4 504 (2 081) 58 817
Total liabilities (25 523) - (27 406) (2 081) (55 010)
External revenue (46 274) (1 065) - - (47 339)
Other material
non-cash items
- Depreciation on
property, plant
and equipment 10 167 - 2 - 10 169
- Amortization on
mineral property
interests 1 795 - - - 1 795
- Rehabilitation
obligation
recognised 1 555 - - - 1 555
- Impairment of
property, plant
and equipment 669 - - - 669
- Impairment of
receivables 247 - - - 247
- Write down mine
supplies 208 - - - 208
- Share of profit
of associate - - (152) - (152)
Finance income 76 10 2 - (88)
Finance costs 486 32 3 593 - 4 111
Taxation (629) - - - (629)
Loss for the year 18 350 4 027 5 304 - 27 681
For the year ended 28 February 2015
Amounts in
Canadian Northern North Corpo- Recon-
Dollars (‘000) Cape West rate ciling Total
Property, plant
and equipment 26 999 - 2 - 27 001
Mineral property
interests 16 518 - - - 16 518
Total assets 47 415 13 525 65 672 (56 607) 70 005
Total liabilities 63 578 22 007 6 612 (56 607) 35 590
External revenue (51 504) (16 494) - - (67 998)
Other material
non-cash items
- Depreciation on
property, plant
and equipment 6 021 248 4 - 6 273
- Amortization on 568 225 - - 793
mineral property
interests
- Rehabilitation
obligation (revised)
recognised 1 406 (413) - - 993
-Impairment of
property, plant
and equipment - 2 576 - - 2 576
- Write down of
mine supplies 48 - - - 48
-Impairment of
sundry receivables 578 3 - - 581
- Share of profit
from equity accounted
investment - - (149) - -
Finance income (347) (93) (9) – (449)
Finance cost 809 374 125 - 1 308
Taxation (2 991) – - – (2 991)
Loss for the year 10 892 2 362 1 272 - 14 526
Corporate information
Registered office – South Africa:
Level 1, Wilds View, Isle of Houghton, Corner Carse O’Gowrie and
Boundary Roads, Houghton Estate, Johannesburg 2198
PO Box 3011, Houghton 2041, South Africa
Telephone: +27 11 484 0830
Facsimile: +27 86 262 2838
Corporate address – Canada:
2900–550 Burrard Street, Vancouver, British Columbia, Canada V6C 0A3
Telephone: +1 604 631 3131
Facsimile: +1 604 631 3232
Toll Free: 1 866 635 3131
JSE sponsor: PSG Capital
First Floor, Building 8 Inanda Greens Business Park,
54 Wierda Road West, Wierda Valley, Sandton 2196
International broker: Northland Capital Partners Limited
60 Gresham Street, London, EC2V 7BB United Kingdom
Auditors: KPMG Inc Chartered Accountants
KPMG Crescent, 85 Empire Road, Parktown 2193, South Africa
Transfer agents - South Africa:
Computershare Investor Services Proprietary Limited
(Registration number 2004/0036471/07)
Ground Floor, 70 Marshall Street Johannesburg 2001, South Africa
Transfer agents - Canada: Computershare Investor Services Inc.
3rd Floor, 510 Burrard Street, Vancouver, British Columbia,
Canada V6C 3B9
Lawyers - South Africa: Brink Falcon Hume Inc Attorneys
Second Floor, 8 Melville Road, Illovo, Sandton 2196, South Africa
Lawyers - Canada: Fasken Martineau DuMoulin LLP
333 Bay Street, Suite 2400, Bay Adelaide Centre, Toronto, Ontario,
Canada, M5H 2T6
Date: 31/05/2016 08:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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